There may be an unpleasant surprise for many Louisiana taxpayers who received federal subsidies for health coverage in 2014. According to recent reports, the federal government want a good portion of that money back because some tax payers incorrectly estimated their incomes.
In fact, up to 45,000 Louisiana residents will either get a reduced refund or will end up paying more taxes as a result of this recent development. The determining factor is whether payers underestimated or overestimated their income when enrolling for health coverage under the Affordable Care Act.
In many cases, Louisiana residents received a government subsidy that was based on their estimated income to help pay for the insurance coverage. But now many are learning that they have to give up part of their tax refund to repay a portion of the subsidy.
According to experts, enrollees in the Affordable Care Act can qualify for a premium tax credit based on their estimated income. The credit can also be used as an advance payment paid directly to their insurance provider. Records show that approximately 90 percent of the lower to middle income taxpayers who enrolled in the federal marketplace in Louisiana received a federal subsidy for insurance. However, many of these taxpayers underestimated their income.
Many workers that enrolled underestimated their income because it was based on job the workers had when they enrolled under the health care law. However, many left positions jobs with better pay or for other reasons. Whatever the reasons may be, workers are finding themselves being penalized for subsidies they received based on honest estimations of income.
Louisiana tax payers are understandably upset and demanding that this issue be fixed as soon as possible. Many find it unfair that they are being penalized for doing what they were supposed to do according to the new “Obamacare” regulations.
Angry opponents of “Obamacare” point to this issue as just another problem with an already unsuccessful government created heath care plan. Still others are demanding answers from law makers about how this could be happening.
Experts estimate that nearly half of the subsidy-eligible households nationwide have to repay their subsidy because of underestimating income. Additionally, some payers are also paying the penalty accidentally for not having health insurance. This can also add up to significant fines for lower income families.
Reports suggest that the average national repayment will be $794, while the average refund is usually around $773. What this means is that for the first time, some families must pay the IRS instead of getting a tax refund. This is starting to present huge problems for families who were counting on the extra money from tax returns to pay for necessary items.
In the tax season crush that already presents significant stress and anxiety, this new development is creating ripples of anger and disappointment through the community. However, there is some relief for lower income families though since repayments are limited for lower-income filers.
Families with income between 100 percent and 200 percent of the federal poverty level, must only pay up to a maximum repayment of $600. Families who are between 200 percent and 300 percent of poverty level must pay a maximum of $1,500 back to the government. This can make a huge difference for lower income families who are already struggling to survive.
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